The city is struggling to collect sewer, landfill and other fees that Kentucky American Water dropped from water bills in September 2012.
The city's billing service, LEXserve, has more than $4.3 million in past-due bills as of May.
Kentucky American Water officials said they dropped the city's fees from bills because the fees were too confusing for customers.
The city's collection rate for May is 3 percent less than what Kentucky American Water collected in May 2012, according to records provided Tuesday to the Urban County Council.
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For May 2012, Kentucky American Water's collection rate was 98.8 percent. The city's collection rate was 95.8 percent for May 2014. That means the city is collecting roughly $1.8 million less than Kentucky American did two years ago.
Rusty Cook, director of revenue, told the Urban County Council's Environmental Quality Committee on Tuesday that the city is increasing efforts to collect those fees. Since the end of May, it has started to turn off water for customers who have large overdue sewer and landfill bills. That was not possible for much of the past two years because the city had to coordinate its efforts with Cincinnati Water, which has the contract to collect the city's fees, and Kentucky American Water, said Bill O'Mara, the city's finance commissioner.
"We didn't want to turn people's water off without having accurate information," O'Mara said. It took a while for the city and the two companies to coordinate efforts, he said.
Customers will be given a 10-day shutoff service notice before the water is shut off, Cook said. After the water is shut off, people must come to the city to pay the minimum of all outstanding sewer or other fees or agree to a payment plan before water service can be restored.
"Water service will be restored the same day if payment or payment agreement is completed by 2 p.m.," Cook said.